National oil companies (NOCs) Pemex and Petrobras will look to their governments for financial support to
fill funding gaps this year, said Nymia Almeida, a senior credit officer at
Moody’s.

“They
will depend on [external] financing, but if the markets are not there, they’ll
go to their governments,” she said at a conference hosted by Moody’s on
May 19.

Brazil’s Petrobras
has outlined plans to raise cash by selling $14.1bn in assets this year and
$21bn in 2017. It has announced assets sales worth about $2.1bn so far this
year, including $1.38bn for its assets in Argentina and Chile. The company also started negotiations with Canadian asset
manager Brookfield over the
sale of the regional natural gas pipeline
operator Nova Transportadora do Sudeste (NTS), which could raise as much as
BRL18bn ($5.04bn).

Earlier this month, Petrobras agreed to a $1bn loan from the Export-Import Bank of China (China
Ex-Im) and also raised $6.75bn from a cross-border bond deal.

“Such
financing could provide up to 0.8% of GDP, leaving the company in need of
sovereign financial support of around 2% of GDP,” Moody’s said in a
report.

Mexico’s state-owned Pemex
has $15bn to $16bn in funding needs but it has a strong sponsor in the Mexican
government, Almeida said. The oil company will likely raise roughly
2.7% of GDP in financing over the next three years but it will still need
sovereign support equal to 3.3% of GDP over the same time period, Moody’s said.

The
government said last month that it will provide MXN73.5bn ($4bn) in support to
Pemex, including MXN26.5bn in direct liquidity support. Pemex last week raised
CHF375m ($383m) from a two-part bond issue in Swiss francs.

State-owned Ecopetrol
also has an equally strong sponsor in the Colombian government but it is
unlikely to need government funding over the next two to three years, Almeida
said. Nonetheless, the government said it was willing to provide short-term
financing until Ecopetrol regains full access to the capital markets.

The
Colombian oil company agreed to a $300m loan from Export
Development Canada (EDC) last week and took a COP990bn ($293m) loan from local lender Bancolombia in February.

Around 32% of Latin America’s banks
have direct but manageable exposure to NOCs, said
Celina Vansetti-Hutchins, a managing director at Moody’s. “NOC exposure is
large but it’s not a problem. Everything else is a problem,” she said,
using the restructuring at Pacific Exploration &
Production in Colombia
as an example.